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Digest No. 1706

Student Loan Scheme (Repayment Bonus) Amendment Bill 2009 (2009 No 28-2)

Date of Introduction: 27 April 2009
Portfolio: Revenue
Select Committee: Education and Science
Date report presented: 03 August 2009
Published: 27 August 2009Prepared by John McSoriley BA LL.B, BarristerLegislative AnalystP: (04) 471-9626 (Ext. 9626)F: (04) 471-1250 Caution: This Digest was prepared to assist consideration of the Bill by members of Parliament. It has no official status.Although every effort has been made to ensure accuracy, it should not be taken as a complete or authoritative guide to the Bill. Other sources should be consulted to determine the subsequent official status of the Bill.

Purpose

The aim of this Bill is to amend the Student Loan Scheme Act 1992 (the Act), with the object of encouraging the early repayment of student loans, by providing for the payment, from 01 April 2009, of a 10% bonus to those persons who make voluntary repayments of $500 or more on their student loans [1]   .

Main changes to the Bill

Commencement

The Select Committee has recommended that the substantive provisions of the Bill come into effect on 01 April 2010 (amending Clause 2 and Clause 4 (the latter by inserting New Section 45G into the Act).

Non-salary and non-wage earners

The Select Committee has recommended a change in the date by which periodic payers may make a qualifying repayment to the date for payment of the final instalment of the borrower’s interim repayments (Clause 4, amending New Section 45B(3)(c)) and New Section 45E(substituting subsection (3)).

Comment

This would be 7 May after the end of the tax year for most periodic payers [2]   .

Loan balance less than $550 when final payment made

The Select Committee has recommended a technical amendment to provide that a voluntary repayment of $500 would attract a bonus sufficient only to clear the loan but no more (amending Clause 4, inserting New Section 45CA).

Multiple voluntary payments in a tax year

The Select Committee has recommended that the Commissioner of Inland Revenue be able to include all voluntary repayments in a tax year in which a loan was repaid in assessing the 10% bonus (amending clause 4, New Section 45E by inserting new paragraphs (a) and (b) in subsection (4) and inserting a new subsection, subsection 5).

Comment

"Under the bill as introduced, only the final balance repaid is eligible for the 10% bonus, not all voluntary repayments in the tax year as for tax years in which a loan is not repaid in full" [3]   .

Copyright: © NZ Parliamentary Library, 2009
Except for educational purposes permitted under the Copyright Act 1994, no part of this document may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, other than by Members of Parliament in the course of their official duties, without the consent of the Parliamentary Librarian, Parliament Buildings, Wellington, New Zealand.This document may also be available through commercial online services and may be viewed and reproduced in accordance with the conditions applicable to those services.

  1. Student Loan Scheme (Repayment Bonus) Amendment Bill, 2009 No 28-1, Explanatory note, General policy statement, p. 1.   [back]
  2. Student Loan Scheme (Repayment Bonus) Amendment Bill, 2009 No 28-2, as reported from the Education and Science Committee, Commentary, p. 2.   [back]
  3. Ibid., pp 2 and 3.   [back]